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Microsoft (MSFT - Free Report) is set to report fourth-quarter fiscal 2022 results on Jul 26.

On Jun 2, Microsoft announced that it has lowered its fiscal fourth-quarter guidance, citing unfavorable foreign exchange rate movement. It expects to report between $51.94 billion and $52.74 billion in revenues for the quarter. The company had previously forecast fourth-quarter revenues in the range of $52.4 billion to $53.2 billion.

Microsoft also slightly cut its earnings forecast for the quarter, saying it now expects to report adjusted earnings per share (EPS) in the range of $2.24 to $2.32. Previously, the company projected adjusted EPS between $2.28 and $2.35.

The Zacks Consensus Estimate for revenues is pegged at $52.28 billion, implying growth of 13.28% from the figure reported in the year-ago quarter.

The consensus mark for earnings has declined 0.4% to $2.29 per share over the past 30 days, suggesting 5.53% growth from the figure reported in the year-ago quarter.

Microsoft’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 8.63%.

Let’s see how things have shaped up for the upcoming announcement:

Microsoft Corporation Price and Consensus

Microsoft Corporation price-consensus-chart | Microsoft Corporation Quote

Teams Momentum to Aid Growth

Continued strength in its cloud computing platform, Azure, is expected to have positively impacted the Microsoft’s fiscal fourth-quarter numbers. Azure is witnessing rapid adoption owing to the accelerated digital transformation by business enterprises globally. Microsoft’s industry-specific cloud offering is also driving adoption.

Intelligent Cloud revenues are anticipated between $21.1 billion and $21.35 billion in the fiscal fourth quarter. Azure's revenue growth is likely to have been aided by continued strength in consumption-based services.

The Zacks Consensus Estimate for Intelligent Cloud revenues is currently pegged at $21.13 billion, indicating 21.6% growth from the figure reported in the year-ago quarter.

The momentum witnessed for Teams, Microsoft’s workspace communication offering might have acted as a tailwind. Teams’ user growth is expected to have been driven by the continuation of remote work and mainstream adoption of the hybrid/flexible work model.

Teams’ monthly user base count has surpassed 270 million so far in 2022. The introductions of Teams Rooms, Mesh for Teams and Teams Essentials are noteworthy developments.

Teams’ expanding customer base and features are actually helping Microsoft win share in the enterprise communication market against Zoom (ZM - Free Report).

At the end of the first-quarter fiscal 2023, Zoom had over 198,900 enterprise customers, up 24% year over year. Moreover, 2,916 customers contributed more than $100,000 to the trailing 12 months’ revenues, up 46% year over year.

A solid uptick in Teams and strong Azure demand instill investors’ confidence in Microsoft.

Strong adoption of Dynamics 365 is expected to have driven top-line growth in the to-be-reported quarter. Microsoft expects revenue growth for Dynamics to be in the mid-20% range, driven by strength in Dynamics 365, including continued momentum in PowerApps.

Shares of Microsoft are down 22.1% year to date against Zoom’s plunge of 41.8%. Microsoft currently carries a Zacks Rank #4 (Sell).

PC Shipment Decline Likely to Have Hurt Top Line

Revenues from Windows are likely to have been driven by steady traction seen in Windows Commercial products and cloud services growth amid weak PC demand.

Per IDC data, 71.3 million PCs were shipped during the second quarter, down 15.3% from the year-ago period, primarily due to supply chain and geopolitical challenges, backed by lockdowns in China and persistent macroeconomic headwinds.

Among big PC vendors, Dell Technologies (DELL - Free Report), Apple (AAPL - Free Report) and ASUS registered a decrease in shipments.

While Apple had a market share of 6.7%, Dell registered a market share of 18.5%. Dell’s PC sales declined 5.3% year over year to 13.2 million units, while Apple witnessed a decrease of 22.5% to 4.8 million units.

Microsoft expects Surface revenues to grow in the lower double-digit range, driven by steady demand for premium devices.

Windows’ commercial products and cloud services revenues are expected to grow in the low double-digit range, driven by demand for Microsoft 365 and advanced security solutions. The consensus mark for revenues from Windows stands at $7.24 billion.

More Personal Computing revenues are expected between $14.65 billion and $14.95 billion. The company expects overall Windows OEM revenues to increase in the low to mid-single digit range, driven by the continued shift to a commercial-led PC market where revenues per license is higher.

The Zacks Consensus Estimate for More Personal Computing revenues is currently pegged at $14.71 billion, indicating 4.5% growth from the figure reported in the year-ago quarter.

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